Microsoft Finance Director’s ‘Aha’ Leadership Moment

With the role of the CFO expanding to include more organizational strategy, it naturally follows that the finance department as a whole will be expected to make a similar shift from “number historian” to a strategic driver of growth. David Elrod, finance director at Microsoft, spoke with me to explain what makes a trusted leader and how we can develop leadership skills in accounting students and young professionals.

This interview has been edited and condensed

Jeff Thomson: You’ve talked about a skills gap in accounting and finance. How do you see the skills gap at work and how does it affect business?

David Elrod: There is a skills gap because a lot of recent college graduates have great technical skills but don’t always understand the importance of telling the story behind the numbers. Accounting staff members play an important role in painting the big picture for their business partners so organizations understand how to make the most effective decisions.
I think back to when I was in undergraduate and graduate school and how many of the issues we discussed were approached strictly from a finance perspective. When I graduated, I thought I would be successful at financial modeling, but I had a hard time communicating the story told by the models I created. Often we get hung up on the numbers, but what our business partners want to know is how it all fits together and what we can do to put the company in a great competitive position.

Thomson: You’ve argued there is a difference between “trusted advisors” and the term that you prefer, “trusted leaders.” What’s the difference?

Elrod: It can be boiled down to one word each; a trusted leader is someone who is proactive and a trusted advisor tends to be someone who is more reactive. Trusted leaders are broad business thinkers who are fluent in the competitive dynamics of their industry. I like to think trusted leaders can look around the corner and see what’s coming to lead their business to the right decision. On the other hand, trusted advisors tend to look at a situation and give their business partners options of how to react to an oncoming situation.

Thomson: Which skills are most needed to become a trusted leader?

Elrod: Having interpersonal skills and being able to communicate the bigger story behind the numbers is very important. Demonstrating a strong willingness and desire to be a partner will reinforce your drive to excel to superiors. Also, leadership skills are very important. There are a lot of soft skills required to be a trusted leader, and financial professionals should develop those skills if they want to advance in their careers.

Thomson: Classroom versus on the job: What can be learned in a classroom and what can be taught on the job? Perhaps it’s a hybrid model?

Elrod: I think it’s always going to be a hybrid model. On-the-job experience is very important for being a trusted leader, but I also don’t want to minimize the educational aspects of leadership. The reality is that many colleges just focus on teaching students to be technically good, but that is just table stakes for being a trusted leader. I think there are actions we can take in school to get students prepared for the workforce, whether it is focusing on leadership, interpersonal communication, or understanding the nuances of influence.

Thomson: A trusted leader sounds as if he has crossed the existing skills gap and gained all the competencies his colleagues may be missing. Was there a defining moment where you decided to become a trusted leader?

Elrod: I don’t think there was initially a specific point in time where I decided I want to be a trusted leader; it was more of an evolution. When I was in internal audit, I would work through the various steps and ensure high quality results with the “i”s dotted and “t”s crossed. From a technical perspective, I was doing an excellent job.
However, as I met with different people, I realized a lot of folks didn’t understand why they were doing a particular control or why they were important in the process. It would have been easy for me to say, “You’re either doing it or you’re not—here’s what you need to do.” But I started to realize it was much more important for me to engage with the people I was auditing to help them understand the importance of their role and how they fit into the bigger picture.
That was when I first started thinking about being more than just a technical auditor or finance person. The experience was a genesis for me in terms of understanding how you can be a great technical accountant, finance person and auditor, but if you don’t relate to the broader group of people in which you work, it’s very difficult to be effective. While I can’t say that was the point I felt I was going to be, or wanted to be, a trusted leader, I can say it was when I first started understanding this concept of trusted leadership.